18-May-98 | point change | % change | |
ISDEX | 149.85 | -4.90 | -3.17% |
ISDEX Price Wtd. | 1,539.13 | -45.13 | -2.85% |
NASDAQ | 1,831.62 | -15.15 | -0.82% |
DJIA | 9,050.91 | -45.09 | -0.50% |
Microsoft (NASDAQ:MSFT) gets slapped with anti-trust lawsuits from the U.S. and several States. The suits cause drops in technology and Internet stocks since some investors believe that if Microsoft sneezes then the computer and Internet industries catch cold. For better or worse the anti-trust concerns highlight the importance of computing and the Internet in the new global economy.
While we don’t advocate government tampering in business there are many precedents for it doing so: broadcasting, telephony, cable, newspapers, essentially every medium has some government control aspect to it or did. Windows is at the point where it is a leading communication device to hundreds of millions of people.
At the same time we’re not convinced that any slowdown in Windows 98 release will affect the continued rollout of the Internet. Windows 95 and an array of off the shelf software provides more than enough compelling features to the Internet user. Email alone has a long way to go but will probably be the most killer ap of the Internet era, period. And you don’t need Windows 98 or 20 megs of application for email.
In context the Internet opportunity is far bigger than Microsoft’s legal hassles, although we think the government is skating on very thin ice in trying to attack just one product. Whether or not Microsoft is the ‘AT&T’ of the computer software business is another matter–just as in the 1980s AT&T was singled out for its size and subsequently broken up into the Regional Bells.
In the end the Internet investment landscape, in our view, remains a compelling one, although we’re not advocating Netscape (NASDAQ:NSCP) as an investment opportunity if Microsoft stubs its toe.
We think the real competition is at the customer and support level, those that provide decent goods and services at reasonable prices almost always seem to win or be in the top tier of companies in any one sector.
In the Web space we believe that boils down to a value-proposition that makes it easy and convenient for users to find, buy, sell, exchange and interact with content and commerce–the barriers to entry there are virtually none–Microsoft or not.
The problem in a digital world is that any one player can provide many or all of the pieces of the value chain if it can. Cable operators can be software developers; software developers can be cable operators; box makers can control which “channels” are seen on TV or PC if they so choose.
Said another way, convergence is a nice word for “splat.”
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